Jamison Company Uses IFRS for Its Financial Reporting

Multiple Choice

Jamison Company uses IFRS for its financial reporting. It produces machines that sell globally. All sales are accompanied by a one-year warranty. At the end of the year, the company has the following data:
-2,500 units were sold during the year.
-The trend over the past five years has been that 4% of the machines were defective in some way and had to be repaired. Of this 4%, half required a full replacement at a cost of £3,000 per unit and half were able to be repaired at an average cost of £300.
What is the expected value of the warranty cost provision?

A) £300,000
B) £165,000
C) £330,000
D) £150,000